Despite the EU’s ambitious goals, Europe’s economy lags behind the US, where a younger workforce and entrepreneurial spirit fuel growth—widening the gap by over 20% in GDP per capita since 2000.
The Lisbon Agenda was signed by the European Union in the early 2000s with the vision to transform it into the most dynamic knowledge-based economy in the world. Yet, over two decades later, the situation has not improved as the gap between Europe and the United States has further opened. Notably, at Europe’s heels and without an economic charter as such as Europe, the US has powered ahead.
The American vs. the European Economic Vision
Globally, economic power has not been achieved deliberately by the US. It has not, for instance, launched large-scale initiatives similar to the Lisbon Agenda or Mario Draghi’s competitiveness outlook. Thus, the only identifiable economic plan that the United States has had in recent years is Joe Biden’s protectionism. Despite criticisms over Draghi’s call on Europe to model its strategy on this, emulating the US model could be very difficult for Europe based on structural and cultural differences.
Despite the EU’s aim at improving competitiveness, it does not have a united national base like the US has. One weakness that hampers Europe’s decision-making is that it has a multinational structure and different cultures. The EU total budget equals 1% of gross national product with a huge contrast as compared to the sources of federal financial authority in the United States.
Welfare Expectations and Cultural Resistance
Notably, Europe has a welfare state that differentiates it from the US. Europeans expect more support from the government than people in other parts of the world due to cultural and historical background. Whether it is Catholic social teaching or feudal traditions of inter-class interdependence, European welfare systems are less stringent than those of the US. This is due to the cultural endowment of social protection, as trendy leaders, including Margaret Thatcher and Emmanuel Macron, learnt through protests and electoral tests.
Telling Europeans to copy American economic changes like reducing statutory paid time off is not feasible because it will spark massive outrage. Due to these cultural beliefs, it is almost impossible to emulate the relatively liberal attitude of the US labour market and most minimal forms of welfare states.
Linguistic and Demographic Challenges
Another barrier is Europe’s incomplete single market. The EU has come a long way in the integration of capital markets but still lags far behind the simplicity of cross-state operations in the United States. One can say that one of the key factors is language differentiation. In contrast to the United States, which has one language, the 27-member EU has many languages and cultural differences, which slow down the creation of pan-European companies.
Also, Europe has a demographic issue to deal with. Europe has become older on the median plan since the 1990s and the economic stagnation of this continent mainly fails on the growth of population in age. So, although the lifespan for Europeans is longer, the US possesses a younger, energetic workforce, which could prove to be useful in the future. However, the US, which sits on the largest proven reserves of oil in the world and even the largest in natural gas, has an energy security that Europe does not have.
Self-employment and Cultural Norms
In addition to resources and demography, there is another huge factor in the US’s favour when it comes to entrepreneurship. In the US, starting a new business is a sign of pride and achievement, unlike in Europe, where people view such a feat with a lot of suspicion. An American investor based in the UK observed that there is very low glamour for young graduates to go into entrepreneurship in Europe. This cultural mindset further hinders Europe as it fails to catch up with the US when it comes to the pace of innovation and growth.
